Investment Analysis | The leading source of data, research, information & resource for investment managers, professional investors, UHNW & HNW investors, and advisors to institutions, billionaires, UHNWs & HNWs. Covering capital markets, investments and private wealth in Asia. How do you invest $3 million to $300 million? How do you manage $20 million to $3 billion of assets? Caproasia - Learn more

This site is for accredited investors, professional investors, investment managers and financial professionals only. You should have assets around $3 million to $300 million or managing $20 million to $3 billion.

Do You Need to Assess the Risks of Financial Product Failures?

As an advisor or Wealth Specialist, do you need to assess the risks of product failures? Is that your job to do so?

In the 1990s, the common investments are straightforward (now that we learnt): Buy insurance products for savings or protection or buy stocks that boom or bust with the economy.  Learn More: List of Economic Crisis Since 1900 – 2015

The List of Financial Instruments in the 1990s:

Ads & Announcements

The 2023 Investment Day | HK & SG - Visit & Register here
Where do you invest $250k, $1 million, $10 million, $100 million or $1 billion? Can you generate IRR of 10% / 15% / 20% or more? Private Equity, Hedge Funds, Boutique Funds, Private Markets & more. Taking place on 28th March 2023 in Hong Kong, 4th April 2023 in Singapore, and Virtual Investment Day in April 2023.

  • Deposits
  • Money Market Instruments
  • Bonds
  • Shares
  • Futures, Forwards, Swaps
  • Mutual Funds (Share Ownership Investment Structure)
  • Insurance Products

The 1980s Insurance Liability Crisis and the Savings & Loans Crisis in United States, gave rise to a stronger financial framework and products.

The development of the Black-Scholes Model on options pricing in 1990s changed the way financial market works, but not before it self-destructed in the collapse of Long-Term Capital Management.

Post 2000 – with the enhancement of technology, economic growth and financial evolution, the product listings have expanded dramatically that now includes:

  • Unit Trusts (Per Unit – Trustee Investment Structure)
  • Exchange Traded Funds
  • Options, Credit Default-Swaps
  • Structured Products
  • Hedge Funds
  • Alternative Investments

Credit Default Swaps and an unprecedented leveraged on mortgages saw the collapse of Lehman Brothers – one of the oldest and largest bank in the world.

Recommended Videos:

With the new range of products, do you need to assess if Financial Products carry risks of failure?

No. 1 You Don’t – It’s Not Your Job

It’s not your job – though not what clients and your CEO wants to hear.

Unless you are the product originator (creating the financial investment structure / product), there is no reason why you need to assess if the financial products will fail – if you are working in a big financial institution. There should be ample safeguards (people, policies and departments) in place before the products are being distributed to you (as Advisors or Wealth Specialists), in turn to clients.

If you have to assess insurance products or investment products’ risks, you would need sophisticated tools to do so. Since financial institutions earn the trust from the public, any loss of faith should cause a massive pull-out of funds from the financial institution.

This means the financial institution naturally inherit fiduciary duties to continue the building goodwill and good faith.

Plus, you wouldn’t have the tools to assess if the products will fail, or do you?


No. 2 Maybe You Should – It’s a Simple Task

Wealth Management Strategy
Wealth Management Strategy

Being a Financial Advisor or Wealth Specialist, you should have the basic financial skills and knowledge to know if the company (bank / financial institution) has good investment prospect, whether it will collapse tomorrow? (easily) or if the company has a good track record.

You should also be able to judge if the financial products may fail or may have a higher chance of failing.

Useful Checklists:

  • Is the product driven by consumer needs or by issuer driven for growth?
  • Is the product returns / risks sustainable over time?
  • Is the product supported and originated by regulators, large financial institutions or market makers?
  • Is there sufficient market liquidity during distressed periods?
  • Is there institutional support for the product during distressed periods?
  • Is the product market a single directional market product (e.g. long only)?
  • Do you have access to pricing information or layered pricing information?
  • Are the product creators / originators new to the organization?
  • Do the product creators / originators have a credible reputation?
  • Do they continuously report strong earnings while investing little in financial product safeguards and development?
  • Do the product issuers have a duty or operating business to end-consumers?
  • Do you trust the brand or the people running the financial institution more?


No. 3 It is Too Difficult – You Need Advanced Tools

How do you know if a Product Issuer will collapse tomorrow? The answer is – you can’t.

A financial institution is highly regulated and a collapse will cause panic and unimaginable collateral risks to relating financial institutions, economy, businesses and people. Thus, every effort would be done to the last minute to salvage the failing financial institution. No news of problems would be released, except for the few working on saving …. or not being able to save the firm.

Even for listed companies, you will only know the financial results at the end of every quarter.  If there is material information that requires public disclosure, it might be too late by then.

Thus, you do really need advanced tools to determine if the financial product has failure risks.

Important Risks to Measure (Regularly):

  • Global / Region / Country Economic Risks
  • Issuer’s credit risks exposure
  • Legal documentation Risks
  • Un-intended or Ignorance Risks
  • Potential Fixing or Market-Manipulation Risks
  • Product Issuance Size & Exposure
  • Operational Risks of Tracking the Products


Do you think you should be the one assessing the product failure risks?  Should you have assess to the tools that monitor if the product failure risks are increasing?

Related Articles:


2021 Data Release
2020 List of Private Banks in Hong Kong
2020 List of Private Banks in Singapore
2020 Top 10 Largest Family Office
2020 Top 10 Largest Multi-Family Offices
2020 Report: Hong Kong Private Banks & Asset Mgmt - $4.49 Trillion
2020 Report: Singapore Asset Mgmt - $3.48 Trillion AUM

Register Below
Latest 2022 data & reports, insights & news
Every Saturday & Sunday 2 pm
Direct to your inbox
Save 2 to 8 hours per week. Organised for success

For Investors | Professionals | Executives

New to Caproasia?
Join 10,000 +
Learn More | Sign Up Today

For CEOs, Heads, Senior Management, Market Heads, Desk Heads, Financial Professionals, Investment Managers, Asset Managers, Fund Managers, Hedge Funds, Boutique Funds, Analysts, Advisors, Wealth Managers, Private Bankers, Family Offices, Investment Bankers, Private Equity, Institutional Investors, Professional Investors

Get Ahead in 60 Seconds. Join 10,000 +
Save 2 to 8 hours weekly. Organised for Success.

Subscribe / Sign Up / Contact Us

    Mailing ListFree TrialSubscriptionMembershipEvents

    Professional InvestorPrivate WealthFamily OfficePrivate BankingWealth ManagementInvestmentsAlternativesPrivate MarketsCapital MarketsESG & SICEO & EntrepreneursTax, Legal & RisksHNW & UHNWs Insights

    Caproasia | Driving the future of Asia
    a financial information technology co.
    since 2014

    Web links may be disabled on mobile for security.
    Please click on desktop.

    Previous articleSingapore Private Banks Under Scrutiny for Selling Risky Debts
    Next articleUnion Bank Partners with Lombard Odier covering capital markets, investments and private wealth in Asia. Our users manage, advise & invest $25 trillion assets in Asia